Monzo Customers Refunded Money Lost to Scammers Through APP Fraud

Someone contacted Mrs K online, claiming they could offer her work. She was asked to open a Monzo account and use it to deposit funds in a cryptocurrency wallet so that tasks could be released to her to work on. According to the caller, she would earn a commission when she completed the tasks. After searching for the company online and finding no negative reviews, Mrs K went ahead with the opportunity.

Over the course of 4 days, Mrs K made 12 transactions totalling £18,000 to purchase cryptocurrency but, when she tried to release her profits, she was given a code to put into her cryptocurrency wallet, and all her money disappeared.

Unfortunately, the company and the job tasks were not legitimate, and Mrs K had fallen victim to a classic employment scam. She was persuaded to authorise the transfer of money from her bank account, believing the transactions were legitimate. This is known as Authorised Push Payment (APP) fraud.

Mrs K complained to her bank, Monzo, which refused to refund any money. Monzo said that it was not responsible for Mrs K’s losses as she had not taken sufficient care to ensure the recipient company was genuine. Mrs K was unhappy with the bank’s decision and took her case to FOS.

The Ombudsman examined all the evidence in the case and concluded that Monzo was partly liable for Mrs K’s losses. Monzo’s scam warnings were insufficient, and a pattern of unusual transactions emerged when Mrs K made her ninth payment, yet Monzo allowed three more payments to go through.

The Ombudsman stressed that the Monzo account had just been set up, so it was more difficult for the bank to identify unusual transactions and determine whether Mrs K was at risk of financial harm.

Following the FOS investigation, Mrs K was told that she should also shoulder some responsibility for her financial losses. The Ombudsman pointed out that she had been contacted out of the blue and received no formal paperwork relating to the job opportunity. Further, she had to pay upfront to access tasks, which would not seem like something a legitimate employer would ask, and the payments she was making were to different people rather than a single business.

FOS concluded that Monzo should pay 50% of the money Mrs K lost after the 9th transaction (equating to £3810), plus 8% interest.

Miss L was a Monzo bank account customer. A fraudster impersonating her bank contacted her and tricked her into taking out a £7000 Monzo loan. She was then asked to make 16 payments from her Monzo account to another account in her name (with bank R). Miss L was asked to send funds totalling £7600 from her R bank account to another account under the fraudster’s control.

Monzo refused to refund Miss L’s lost funds, saying she authorised them and was responsible for the losses, so she complained to the Financial Ombudsman Service (FOS).
FOS considered all of the available evidence in Miss L’s case. The loan was deemed less relevant than the authorised payments, so the Ombudsman’s ruling focused largely on those.

A FOS investigator said that Monzo should have been looking for unusual or uncharacteristic transactions on Miss L’s account that might indicate a fraud risk. By the time the sixth payment had been made, there was enough of a pattern for Monzo to step in, contact Miss L, and question if everything was in order.

A common scam tactic involves making a series of transactions that increase in value to a new payee within a short time. However, Monzo said that, as the money was being transferred to another account in Miss L’s name (at bank R), nothing was flagged as unusual.

The case was referred to an Ombudsman for final review who concluded that Monzo’s actions weren’t good enough and that the bank should have done more to protect Miss L and her money. Monzo can block payments when it suspects criminal activity on an account, or to protect a customer from fraud. The Ombudsman also believed that, had the sixth and subsequent transfers been blocked and investigated further, Miss L could have recovered the previous five payments from her R account before any money ever reached the scammer’s hands.

The Ombudsman did, however, hold Miss L partly responsible for her financial loss, stating that she should not have expected her own bank (as the fraudster was purporting to be) to ask her to take out a loan and then make a series of payments to another account, both of which would be considered unusual activity.

She received a refund of £2995 plus interest at 8%.

Mr M received a series of text messages from a supposed recruitment company and responded because he was looking for work. He was offered a role in generating reviews and orders online, for which he would be paid a commission after completing each task. He was asked to set up an account on the company’s online platform and purchase cryptocurrency, which would be used to buy tasks. In just over three weeks, Mr M had made 25 payments from his Monzo account to three different cryptocurrency exchanges, totalling almost £20,000.

Mr M was asked for increasingly large amounts of money to access the tasks and received other text messages promoting similar employment opportunities. He became suspicious, researched the company and discovered that he had been scammed. Mr M contacted Monzo to report the problem and asked for a refund. Monzo refused, saying it had acted on Mr M’s instructions, followed correct procedures and regulations, and he had legitimately purchased (and received) cryptocurrency.

Mr M was unhappy with Monzo’s response and took his complaint to the Financial Ombudsman Service. FOS thought Monzo should have spotted the unusual activity on Mr M’s account and stepped in to prevent the seventh and subsequent payments. The first four payments ranged from £10 to £150, after which they jumped up quickly to £800, £1925 and then £4452.28. Both the amounts transferred, and the frequency of the transactions should have raised red flags with Monzo that Mr M was at risk of financial harm.

Despite the fact that this was clearly a sophisticated scam, where Mr M was able to log onto a legitimate looking business platform, complete tasks and see the commissions he had earned, FOS thought that Mr M should still bear some responsibility for his financial loss, given that:

• He had been contacted out of the blue
• He was told he could earn a significant amount of money in a short time
• He had to pay upfront to access tasks
• His commission would be paid in cryptocurrency
• He had to spend increasingly larger amounts to continue ‘working’

The Ombudsman concluded that Mr M should have been more suspicious and could, for example, have carried out research on the company that contacted him, to establish whether it was a genuine opportunity or a ‘too good to be true’ scam.

Monzo was ordered to pay back 50% of the amount Mr M lost from the seventh payment onwards, plus 8% interest.

While the starting position is that your bank should carry out your instructions promptly, such as making a payment from one account to another, banks are also responsible for protecting customers and their funds from fraud. They know more about fraud and scams than the public; they can monitor accounts, identify suspicious transactions, and block or delay payments to allow time for further investigation.

Impersonation scams and employment task scams are very common types of APP fraud. Scammers use clever tactics to make their requests for money seem plausible, and they often ask their victims to fool fraud detection systems by lying to the bank about what the payments are for.

Head of the APP Fraud and Scams team and Partner at TLW Solicitors, Sarah Spruce, says:

“Authorised payment scams are very clever, and these case studies highlight some of the ways people are fooled into thinking they are genuine. If you or a loved one have been taken in by a fraudster’s story, don’t be ashamed or embarrassed – you are certainly not alone. My team can help you navigate the process of getting your money back, so please get in touch and we can investigate whether you are eligible to make a ‘no-win, no-fee’ refund claim.”